Obama’s Jobs Program and Immigration

12/04/2008

I have a different perspective on Obama’s job creation plan than the one Steve Sailer has brought up. I personally tend to think it is utterly appropriate to significantly increase infrastructure spending in the US, especially during a recession, and I expect significant short-term and long term benefits from that approach-if the projects are carefully chosen.

One thing we need to nail down is just what does the Obama administration mean by creating 2,500,000 new jobs? What I tend to think they mean is there will be 2.5 Million more folks employed in the US at the end of 2 years than there were at the beginning. That isn’t really quite as hard to meet as it might seem. US employers shed 250,000 employees in November alone. Just undoing the damage to credit and cash flows the financial crisis has caused the last few months would undo some of that damage pretty quickly.

When it comes to repair of infrastructure and creation of alternative energy, it also isn’t just the number of folks that are employed in projects. There generally is a multiplier effect. For each job created in a public works project, there are additional jobs created in servicing those workers. $500 billion in stimulus translates into $200,000 per job for two years — so there really would be funding to meet this goal if a stimulus package goes through. In fact, I think they might meet these goals with a more modest stimulus, or diversion of some of the funds just to maintain existing government operations.

One major problem is with immigration levels. The US gets 800,000-1.1 Million legal immigrants each year. When the economy is functioning, it gets another 800,000 to 1,000,000 illegal immigrants each year. Obama has promised an amnesty-and that means there is a strong chance that we'll see some expansion of illegal immigration from folks trying to take advantage of that amnesty if there are any jobs that would facilitate taking advantage of that amnesty. Most of these immigrants are of working age-and aren’t independently wealthy, so that means that in a 2 year period, we'd need at least 1,040,000-1,400,000 additional jobs just to handle the inflow of recent immigrants-even assuming a low labor force participation rate of 65%.

On top of that, the natural increase of the US workforce has been over 100,000 new workers per month. That means we'd need 1,800,000 new jobs over the next two years just to maintain something like the current level of labor force participation.

Creating 2.5 Million new jobs over two years is not really a reversal of present trends-it is more a slowing of the decline — unless you manage net immigration levels. I have repeatedly suggested a package of policies here:

Small resettlement allowances to illegal immigrants willing to self-deport and provide evidence against former employers.
A more substantial buy back program for recent recipients of green cards willing to repatriate permanently.
Normalization of status in the form of truly temporary worker visas for illegal aliens — with an iron clad assurance the total number of temporary workers will be gradually reduced(which would mean gradual repatriation of the illegal alien population).
Collection of all back fines for past violation of immigration laws
Dramatic increase in penalties for employing and housing illegal aliens in the future.
Substantially increased fees on all forms of legal immigration-particularly those forms related to employment(those fees could be mitigated from countries that accept immigrants and temporary workers from the US).
A program to create jobs in Mexico and other source countries-with an emphasis on increasing jobs in areas of those countries accepting recent migrants(this could be funded by collecting fines for existing violations and future violations-and an increase in visa fees for legal immigration).
Full investigation of crimes indirectly related to illegal immigration(i.e. operation of a methamphetamine lab in a packing plant that was largely hiring illegal aliens).

It will be rather hard to dramatically reduce all family based immigration-especially immigration of spouses and minor children. However, it is clear we have had such relationships manufactured in the past. Simply raising the fees for such immigration to the level of payments we have see for facilitating immigration would contain much of the excess. Even after raising those fees to say $5000-$10,000 per visa(still a bargain price), I expect we'd still see 300,000 or so immigrants coming as either minor children or spouses each year — particularly if we broadly improve economic conditions and jobs quality in the US.

Increasing employer fines from the present maximum of $25,000 per violation to $500,000 per violation or so — and actually enforcing the law, would effectively dry up much new illegal immigration. Some existing businesses would be put into new hands by enforcement of existing laws — and those owners that survived would be well-informed of the new laws as they go into effect.

I think we should looking at managing employment based immigration by fees rather than quotas-and those fees should be substantial — as they are in growing, well-managed economies like Singapore ($300,000 per green card and $20,000 per year for workers from countries that don’t accept many American workers might be reasonable). Even if we expanded investor immigration-and some classes of skilled immigration associated with increased employment of Americans, we could easily get overall levels down to 600,000 per year. At that level of immigration, creating 2.5 Million jobs in two years really does keep up with natural increase of the workforce and immigration-and we can start to look at undoing the damage to jobs growth-and jobs quality created by decades of neglect and mismanagement.

If the Obama administration persists on a path of increasing immigration, 2.5 Million new jobs means only a slowdown of the economic decline for the existing American population. Eventually, the GOP will either get its act together — or be replaced by a party that takes the interests of American workers seriously.

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